Volvo: Swedish Company with Chinese Characteristics?

Is the executive team leading Volvo Cars getting along with the Swedish auto company’s new Chinese owners?

Is Volvo losing its Scandinavian identity and being turned into a Chinese brand?

Those are questions being asked by Volvo enthusiasts and outside observers worried about the future of the Swedish icon, which was purchased from Ford Motor Co. by China’s Zhejiang Geely Holding Group Co. last August.

Advertisement

Imaginechina/Zuma Press

Chinese car buyers look at a Volvo car at a Volvo dealership in Shanghai, Aug. 28, 2010. Volvo President and Chief Executive Stefan Jacoby has said the company is considering manufacturing Volvos in China and selling them in the U.S. Zhejiang Geely Holding Co., which acquired Volvo last year, has said it is spending $2.7 billion on the takeover, including about $900 million in working capital to improve Volvo.

Not to worry, says the head of Volvo. In a recent interview, new Volvo Chief Executive Stefan Jacoby said he is getting along fine with Volvo’s new owner, and with Geely chairman Li Shufu in particular.

“It is as easy and as difficult as with any other shareholder,” Mr. Jacoby said of Geely and Mr. Li. “There isn’t any difference between Chinese shareholders and those coming from Europe, the U.S. or any other regions.”

Mr. Jacoby was hired away from Volkswagen AG’s U.S. unit last year to run Volvo – a move Geely took after acquiring the “boxy but good” automaker.

Since Geely completed its takeover of the Volvo, Mr. Jacoby said, the Swedish company has adopted a global outlook and has a “very international” and diverse board of directors overseeing the company’s management team. “That,” Mr. Jacoby, a native of Germany, said, “is an ideal combination” which should allow Volvo to develop a “global view.”

“Volvo needs to go further global,” the CEO added. With Geely, “we’re writing a new chapter of Volvo. In a nut shell, I am very happy with the collaboration with Geely and Li Shufu.”

Despite Mr. Jacoby’s assurances and Mr. Li’s repeated pledges to leave Volvo alone to develop plans to revive itself, doubts still linger. Some Volvo insiders tell China Real Time that there indeed have been some fairly ugly clashes between Chinese managers from Geely and Volvo executives, although details are still scarce.

One big worry as Geely asserts itself in planning Volvo’s upcoming new global strategy, which is expected to be unveiled in China (most likely in Beijing) before the end of the first quarter: Is Volvo going to be Swedish enough going forward?

Under the new global plan, which aims to boost sales of Volvo cars in China significantly, Volvo is looking at expanding manufacturing in China. Mr. Jacoby also said in a separate interview last year that his company would try to develop a lineup of vehicles that share as many components as possible to lower the cost of manufacturing and is seeking low-cost parts through Geely’s Chinese supply base.

Addressing those worries–and despite the company’s new “international” board of directors–Volvo’s CEO said Volvo would become even more Swedish.

“We should even be more Scandinavian and Swedish than ever before because that is what is so distinct about our company,” he says. “As a Scandinavian and Swedish brand with all the good things this heritage offers with respect to design, tradition, human centric nature, and safety, we need to maintain this and further strengthen this. It makes no sense in copying Japanese and German premium brands.”

Expert Insight

New rules on labor negotiations in southern China offer a potential solution to the country's growing problem with labor unrest while at the same time illustrating the difficulty the Communist Party faces in effectively addressing workers’ grievances.

For much of the last half-century, changing China through economic reform seemed to make far better sense than transforming the country through political revolution. Xi Jinping is trying to flip that on its head.

About China Real Time Report

China Real Time Report is a vital resource for an expanding global community trying to keep up with a country changing minute by minute. The site offers quick insight and sharp analysis from the wide network of Dow Jones reporters across Greater China, including Dow Jones Newswires’ specialists and The Wall Street Journal’s award-winning team. It also draws on the insights of commentators close to the hot topic of the day in law, policy, economics and culture. Its editors can be reached at chinarealtime@wsj.com.